Lew, Solomon v Kaikhushru Shiavax Nargolwala and Others and another appeal

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeAndrew Phang Boon Leong JCA,Jonathan Mance IJ,Sundaresh Menon CJ
Judgment Date10 February 2021
Docket NumberCivil Appeals Nos 38 and 126 of 2020

[2021] SGCA(I) 1

Court of Appeal

Sundaresh Menon CJ, Andrew Phang Boon Leong JCA and Jonathan Mance IJ

Civil Appeals Nos 38 and 126 of 2020

Lew, Solomon
and
Kaikhushru Shiavax Nargolwala and others and another appeal

Philip Antony Jeyaretnam SC, Lee Chia MingandLee Jiemin Nicolette (Dentons Rodyk & Davidson LLP) for the appellant in CA 38/2020 and respondent in CA 126/2020;

Ramesh Kumar s/o Ramasamy, Tan Shu-Ning Alyssa, Lim Min Li AmandaandEdmond Lim Tian Zhong (Allen & Gledhill LLP) for the first and second respondents in CA 38/2020 and the appellants in CA 126/2020;

Christopher Anand s/o Daniel, Harjean KaurandKeith Valentine Lee Jia Jin (Advocatus Law LLP) for the third and fourth respondents in CA 38/2020;

Chua Han Yuan Kenneth and Hannah Alysha bte Mohamed Ashiq (TSMP Law Corporation) for the fifth respondent in CA 38/2020.

Case(s) referred to

A Nesbitt & Co Ltd v McClure [1971] Lexis Citation 22 (distd)

Air Studios (Lyndhurst) Ltd T/A Air Entertainment Group v Lombard North Central plc [2012] EWHC 3162 (QB) (folld)

Alphire Group Pte Ltd v Law Chau Loon [2020] SGCA 50 (folld)

Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50 (refd)

Armar Shipping Co Ltd v Caisse Algerienne d’Assurance et de Reassurance [1981] 1 WLR 207 (refd)

Bear Stearns Bank plc v Forum Global Equity Ltd [2007] EWHC 1576 (Comm) (folld)

Bunga Melati 5, The [2016] 2 SLR 1114 (refd)

China Coal Solution (Singapore) Pte Ltd v Avra Commodities Pte Ltd [2020] 2 SLR 984 (folld)

CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR(R) 543; [2008] 4 SLR 543 (folld)

Compagnie Tunisienne de Navigation SA v Compagnie d’Armement Maritime SA [1971] AC 572 (refd)

Compania Naviera Micro SA v Shipley International Inc (The Parouth) [1982] 2 Lloyd's Rep 351 (folld)

El Ajou v Dollar Land Holdings plc [1994] 2 All ER 685 (distd)

First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd's Rep 194 (folld)

Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 (folld)

JES International Holdings Ltd v Yang Shushan [2016] 3 SLR 193 (distd)

JIO Minerals FZC v Mineral Enterprises Ltd [2011] 1 SLR 391 (refd)

Marme Inversiones 2007 SL v NatWest Markets plc [2019] EWHC 366 (Comm) (refd)

Mount Albert Borough Council v Australasian Temperance and General Mutual Life Assurance Society Ltd [1938] AC 224 (refd)

OCBC Capital Investment Asia Ltd v Wong Hua Choon [2012] 4 SLR 1206 (folld)

Pegaso Servicios Administrativos SA de CV v DP Offshore Engineering Pte Ltd [2019] SGHC 47 (overd)

Senda International Capital Ltd v Kiri Industries Ltd [2020] 2 SLR 1 (folld)

Simpson Marine (SEA) Pte Ltd v Jiacipto Jiaravanon [2019] 1 SLR 696 (folld)

Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd [2011] Bus LR 1126 (refd)

Singapore Salvage Engineers Pte Ltd v North Sea Drilling Singapore Pte Ltd [2016] SGHC 5 (folld)

Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd [2011] 3 SLR 540 (folld)

Spooner v Browning [1898] 1 QB 528 (refd)

Tan Swee Wan v Johnny Lian Tian Yong [2018] SGHC 169 (folld)

Tullio Planeta v Maoro Andrea G [1994] 2 SLR(R) 501; [1994] 2 SLR 489 (folld)

Wasa International Insurance Co Ltd v Lexington Insurance Co; AGF Insurance Ltd v Same[2010] 1 AC 180 (refd)

Whitworth Street Estates (Manchester) Ltd v James Miller and Partners Ltd [1970] AC 583 (refd)

Legislation referred to

Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 110 r 46(1)

Civil and Commercial Code BE 2551 (2008) (Thailand) s 366

Agency — Construction of agent's authority — Buyer making offer to purchase villa through third party — Sellers requesting for offer letter in writing with details through same third party — Third party informing buyer that sellers had agreed to offer — Whether third party had actual authority to bind sellers to oral contract — Whether third party had apparent authority to bind sellers to oral contract

Agency — Ratification — Whether sellers had ratified alleged oral contract by conduct

Civil Procedure — Costs — Whether costs on issue of proper law of purported oral contract should be awarded against successful party of suit

Conflict of Laws — Choice of law — Contract — Whether lex fori and/or three-stage approach applicable to determine if contract had been validly formed and concluded — Whether possible to infer parties' choice of law to govern issue of contract formation

Contract — Formation — Whether binding oral contract was formed when third party erroneously informed buyer on behalf of sellers that sellers agreed to buyer's offer

Trusts — Accessory liability — Shareholders who had purportedly already orally agreed to sell their shares in company then selling their shares to another party — Whether shareholders' knowledge of purported prior oral contract could be attributed to company — Whether there was dishonest assistance when company's director entered new shareholder into company's register of members

Facts

These civil appeals, CA/CA 38/2020 (“CA 38”) and CA/CA 126/2020 (“CA 126”), arose from the suit, SIC/S 2/2019 (“the Suit”), commenced by the appellant in CA 38, Mr Solomon Lew (“Mr Lew”), resident in Melbourne, Australia, against the five respondents in CA 38. The dispute related to the sale of shares in a British Virgin Islands (“BVI”) company owning certain rights in relation to a luxury villa, Villa 29 (“Villa 29”), in the Andara Resort (“the Resort”) in Phuket, Thailand. The key title rights – consisting of the lease of a plot of land, ownership of the building on it, a construction permit and house registration – together gave occupation rights. The Resort's general manager was at all relevant times Mr Daniel Meury (“Mr Meury”).

The BVI company owning Villa 29 was the fifth respondent in CA 38, Querencia Ltd (“Querencia”). Querencia was the vehicle which the first and second respondents in CA 38, Mr Kaikhushru Shiavax Nargolwala and Mrs Aparna Nargolwala (“Mr Nargolwala” and “Mrs Nargolwala” respectively; “the Nargolwalas” collectively), residents of Singapore, used to acquire Villa 29 while it was being built in 2007.

On 11 October 2017, Mr Lew communicated, through Mr Meury, to the Nargolwalas an offer to purchase the Nargolwalas' shares in Querencia for US$5,250,000 on a “walk in walk out” basis “with a settlement within 14 days”. Mr Lew claimed that the Nargolwalas, in response to this offer, communicated on the same day to him, through Mr Meury, their binding oral agreement to sell their shares in Querencia to him. The Nargolwalas denied this and said that they sold, and on 14 November 2017 transferred, their shares in Querencia to the third respondent in CA 38, Quo Vadis Investments Ltd (“Quo Vadis”), a Hong Kong company controlled by the fourth respondent in CA 38, Mr Christian Larpin (“Mr Larpin”).

In these circumstances, Mr Lew claimed in the Suit that the Nargolwalas acted in breach of their agreement for sale to him, and acted in breach of fiduciary duty in transferring the shares in Querencia to Quo Vadis. He further claimed that Mr Larpin and hence Quo Vadis knew of the Nargolwalas' agreement to sell to him, and were liable for inducing its breach, and that Querencia itself was in breach of fiduciary duty and trust by dishonestly assisting the Nargolwalas' breach by registering the transfer of its shares to Quo Vadis.

The Singapore International Commercial Court judge (“the judge”), after a nine-day trial, held that Mr Lew's claims failed in their entirety. They failed against the Nargolwalas because no binding agreement had been reached between them and Mr Lew, and they necessarily failed in consequence against all the other respondents. However, the judge also held that, had a binding agreement come into existence between the Nargolwalas and Mr Lew, then: (a) Mr Larpin would not have had sufficient knowledge of any sale to render him liable for inducing its breach, but (b) Querencia would have had sufficient knowledge through the Nargolwalas. The first appeal, CA 38, was by Mr Lew against the dismissal of all his claims against all the respondents.

In reaching his conclusions, the judge considered that it could be inferred from the parties' intentions that Singapore law was applicable to govern the issue of whether a binding agreement had been reached between the Nargolwalas and Mr Lew. That was the law for which Mr Lew had argued. The Nargolwalas argued on the other hand for Thai law. The judge heard evidence about Thai law and concluded that, even if Thai law applied, there would be no different outcome on the primary question of whether a binding oral contract was reached. However, the judge went on to hold that, under Thai law, any such oral contract would, as the Nargolwalas submitted, have been unenforceable. In these circumstances, when it came to costs, the judge ordered that, although the Nargolwalas should recover their reasonable costs of the proceedings generally, they should be deprived of their costs on the issue of whether Thai law applied, and they should also bear Mr Lew's costs on that issue. The second appeal, CA 126, was by the Nargolwalas against that latter aspect of the judge's costs order.

Held, dismissing the appeal in CA 38 and allowing the appeal in CA 126:

CA 38: the appeal on liability

(1) There was no basis to disturb the judge's finding that Mrs Nargolwala, who was the person Mr Meury spoke to on 11 October 2017, did not agree to Mr Lew's offer, and that she had instead told Mr Meury that she needed an “offer letter in writing” with “details” so that she could discuss the proposal with Mr Nargolwala: at [32].

(2) The judge erred in finding that Mr Lew considered that the alleged agreement was merely the precursor to completion at a later date and that an objective assessment of the contemporaneous documents led to the same conclusion...

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